Hersha Hospitality Trust, owner of luxury and lifestyle hotels in coastal gateway and resort markets, closed on the refinancing of a $500 million senior secured credit facility and the closing of the first tranche of six of the previously announced disposition of seven non-core Urban Select Service properties.
The $500 million credit facility consists of a $400 million term loan and an undrawn $100 million revolving credit line. The facilities will bear interest at 2.50% over the applicable adjusted term SOFR. The $500 million credit facility matures in August 2024 and has one 12-month extension option subject to certain conditions, which would result in an extended maturity of August 2025. The company utilized an existing swap to hedge $300 million of the new term loan at a fixed rate of approximately 3.95%. Following the refinancings, 72% of the company’s outstanding debt is either fixed or hedged through various derivative instruments. The company has a weighted average interest rate of approximately 4.15% across all borrowings with a weighted average life-to-maturity of approximately 2.7 years.
“We are pleased with our lending group’s continued support and constructive view of Hersha’s growth initiatives and strategic direction,” Jay H. Shah, CEO of Hersha, said. “The refinancing of our existing credit facilities sustains the significant efforts undertaken to optimize our balance sheet and provides additional flexibility to execute our business plan. The credit facility refinancing in conjunction with the mortgage refinancings we completed in 2021 address our near-term maturities. Furthermore, the utilization of the existing swap on $300 million of the new term loan is forecasted to result in approximately $10 million of interest expense savings over the life of the new term loan.”
The term loan refinancing was arranged by Citibank, Wells Fargo Securities and Manufacturers and Traders Trust Company as joint lead arrangers and joint book running managers, with Citibank as administrative agent and collateral agent. Wells Fargo Bank and Manufacturers and Traders Trust Company acted as co-syndication agents. Manufacturers and Traders Trust Company, Fifth Third Bank and Wilmington Savings Fund Society acted as co-documentation agents. Other participating lenders include Goldman Sachs, Raymond James Bank, The Huntington National Bank and The Provident Bank.